MYERS INDUSTRIES INC Q4 FY2025 earnings call

• Aaron began by reviewing fourth quarter and full year 2025, noting it was an inflection point with focus transformation program and sale of Meijer's Tire Supply. • Fourth quarter sales were flat year over year excluding low margin product exit, margins expanded. • Full year 2025 saw material handling sales increase and distribution demand decline, but operating and net income increased on reported and adjusted basis, cash flow improved. • Focus transformation program had four objectives in first year: establish culture of execution and accountability, create clear strategies to improve portfolio profitability, deliver consistent results by controlling what can be controlled, and deploy capital allocation framework. • In 2026, shift in focus transformation approach with three strategic priorities: focus on core markets and customer value, instill operational excellence and cost leadership, focus on investments that maximize profitable growth.

Fourth quarter net sales were $204 million, essentially flat year over year due to exiting low margin products with idling of two rotational molding facilities; excluding this, sales would have been up 3%. Adjusted gross margin increased 140 basis points to 33.6% due to favorable mix and higher volume, partially offset by unfavorable price. Adjusted operating margin improved 230 basis points to 11% as SG&A was lower. For the full year 2025, net sales were $825.7 million, down 1.3% year over year; excluding idling of rotational molding facilities, sales decreased 0.6%. Material handling net sales decreased $0.4 million, but excluding idling impact, sales increased 3.4%; distribution net sales increased 0.9%. Adjusted EBITDA margin for material handling was 25.6%, expanding 290 basis points, and for distribution, it improved 160 basis points.

• 2026 capital allocation framework to balance investing in growth and returning cash to shareholders, expect capex close to 3% of sales. • Market outlook for 2026: due to divestiture of MTS, no outlook for automotive aftermarket; MTS to qualify for discontinued operations accounting from Q1. • Industrial expected to have moderate growth with manufacturing capital expenditure recovery, military inventory replenishment. Infrastructure to have strong growth due to large construction and utility projects. Vehicle market expected to be stable with mixed demand, consumer sales expected to be stable with consideration of winter storms. Food and beverage end market forecasted to be slightly down.

Q: Broader market sentiment on industrial production, PMI being strong, and breaking down industrial subcategories.

A: PMI gives broad scope, products like Acro Mills track with industrial strength, other product lines tied to specific end markets like automotive, construction, agriculture.

Q: Selling to U.S. DOW and NATO, pickup in demand.

A: Sell to both U.S. military and NATO, NATO's strategic priority for independent supply chain creates opportunity, product dovetails well with munition needs.

Q: Material handling margins in fourth quarter and baseline.

A: Fourth quarter material handling margins benefited from focused transformation savings, good mix, and slight pickup in volumes after restructuring, no reason to suggest margins won't continue but will monitor risk and material costs.

Q: Incremental cost reduction in 2026.

A: There will be some incremental cost reduction, dependent on sale of distribution business and actions in material handling, but specific 2026 target not discussed yet.